What Percentage Is the State of Wisconsin's Income Tax for Married Filers with No Exemptions?
Like many states, Wisconsin maintains a progressive income tax. This means that the more you make, the higher your income tax rate is. As such, the maximum rate that a married couple pays is determined much more by their actual taxable income than by their exemptions. In Wisconsin, exemptions have no effect on tax rates, since all that they can do is reduce taxable income.
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Marginal Tax Rates and Brackets
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To understand the tax rate that married couples in Wisconsin pay, you need to understand how income taxes work. When people say that they are in the 4.6, 6.15, or 6.75 percent bracket, they do not mean that they are paying that tax rate over their entire taxable income. Instead, they pay a combination of tax rates, with, for instance, their first $13,560 of taxable income subject to a 4.6 percent tax rate, the income above $13,560 up to $27,150 subject to a 6.15 percent rate, up until they reach the rate that they pay on their last dollar earned, which is the highest rate that they pay. That rate is called the marginal tax rate.
Exemptions
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In Wisconsin, exemptions do not necessarily affect the tax rates that a married couple pays. All that exemptions do is to reduce taxable income by $700 per exemption, as of the 2010 tax year. If a married couple has no exemptions, they simply pay tax on whatever their taxable income comes out to be.
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Married Filing Jointly
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A married couple filing jointly with no exemptions falls subject to five tax rates in Wisconsin. Income between $0 and $13,579 carries a 4.6 percent tax rate, while income between $13,580 and $27,149 gets hit with 6.15 percent tax and income between $27,150 and $99,999 falls subject to 6.5 percent tax. Wisconsin also maintains two additional brackets for higher income tax payers with incomes of $100,000 and higher. Income from $100,000 to $203,649 falls into the 6.5 percent bracket, while the two higher brackets of 6.75 and 7.75 percent fall on income above $203,650, with the highest 7.75 percent rate coming into effect only on income over $298,940.
Married Filing Separately
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Couples who are married but choose to file separately fall subject to the same five tax brackets as couples filing jointly. The difference is that the thresholds for brackets are halved. So, each party in a married couple filing separately would pay the 6.15 percent rate on income above $6,789. As another example, High-income separate filers pay the 7.75 percent rate on income over $149,470 instead of the $298,940 bracket that applies to joint filers.
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